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Nigeria's revenues from LNG exports declined in the first quarter of 2023 to the lowest in five quarters, due to security challenges and declining associated natural gas production at oilfields, Nigerian media reported on Monday, quoting government data and industry experts.
Between January and March this year, Nigeria's earnings from liquefied natural gas exports slumped by 18% compared to the third quarter of 2022 and stood at $1.3 billion (622 billion Nigerian naira), per data from the National Bureau of Statistics (NBS) cited by local news outlet BusinessDay. This was the lowest quarterly income from LNG for Nigeria since the first quarter of 2022, when LNG prices and demand surged following the Russian invasion of Ukraine.
The Nigerian revenues, however, were down not only because of the recent lull in LNG markets. Issues with security in oil- and gas- producing areas and the lack of new drilling and investment in new fields are also taking their toll.
In January this year, Nigeria LNG, the company exporting liquefied natural gas from the African country, canceled several shipments due to vandalism on gas pipelines that disrupted operations.
Nigerian LNG accounted for 7% of the European supply of the super-chilled fuel in 2022, per data compiled by BloombergNEF.
"Incessant attacks on oil and gas facilities, the rising cost of oil and gas production, need for newer drilling technology, and community issues reduced the amount of associated gas, which serves as feed gas for LNG companies to purify, liquefy and ship for export," Olufola Wusu, partner and head of oil and gas at Megathos Law Practice, told BusinessDay.
Maturing oil and gas fields, the lack of new well drilling, and delays in the tenders for new exploration blocks also played a part in the lower revenues for Nigeria from LNG, Wusu added.
Nigeria has already seen $21 billion worth of assets divested, which could continue to reduce its oil and gas production.
By Michael Kern for Oilprice.com
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Michael Kern is a newswriter and editor at Safehaven.com and Oilprice.com, More